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Testimony on the President's FY 1988 Budget Request for the U.S. Department of Health and Human Services by The Honorable Donna E. Shalala
U.S. Department of Health and Human Services

Before the House Appropriations Committee, Subcommittee on Labor, Health and Human Services, Education and Related Agencies
February 11, 1997

Mr. Chairman and Distinguished Members of the Subcommittee:

I am pleased to appear before you today to discuss the President's 1998 budget for the Department of Health and Human Services.

As we move toward a new century, our Nation faces significant health and human service challenges. Advances in biomedical research and medical technologies, changing demographics, and transformations in the structure and delivery of health care and social services all present us with new opportunities and new demands. The President's FY 1998 budget for the Department of Health and Human Services (HHS) ensures that our Nation's health and social services programs will have the flexibility to address these changes.

Our budget takes several critical steps toward creating a stronger and healthier nation:

  • It puts us on a path to a balanced budget by 2002;

  • It preserves Medicare and Medicaid by reforming, strengthening, and modernizing both programs;

  • It helps provide health insurance to growing numbers of American families, especially children who do not have it;

  • It helps families raise strong and healthy children by strengthening our investment in Head Start, teen pregnancy prevention and abstinence education; increasing opportunities for adoption; and bolstering our efforts to reduce tobacco and drug abuse among youth;

  • It provides assistance and support to States as they assume new responsibilities under welfare reform and to families as they make the transition to work;

  • It creates a strong public health agenda for the next century by sustaining biomedical research at the National Institutes of Health, developing a new food safety initiative, combating infectious diseases and providing life-extending drug therapies to people with AIDS; and

  • It emphasizes tough management strategies that cut costs, ensure program integrity, create technological opportunities, promote effectiveness, respond to our customers and empower our partners.

The President's FY 1998 budget proposes a balanced budget by FY 2002 through a combination of program savings, responsible reforms and strong management. The Department of Health and Human Services plays a major role in this balanced budget effort. The President's FY 1998 budget for the Department of Health and Human Services totals $376 billion in outlays of which $34.7 billion is discretionary spending. Of the total amount requested, $228 billion in spending will be for programs that fall under this Subcommittee. This amount includes $31.7 billion in discretionary spending, an increase of 1.5 percent over FY 1997.


The President's Medicare plan preserves and modernizes the program, reducing projected spending by a net $100 billion over five years while guaranteeing the solvency of the Part A Hospital Insurance trust fund until 2007. We are reforming Medicare to make it more efficient and responsive to beneficiary needs to make it a more prudent purchaser, to give seniors more choices among private health plans, to cut the growth of provider payments, and to hold the Part B premium to 25 percent of program costs.

In FY 1998, HHS will continue to crack down on Medicare and Medicaid fraud and abuse through implementation of the Medicare integrity and anti-fraud and abuse programs that are authorized by the Health Insurance Portability and Accountability Act of 1996. Building on the successes of the HHS pilot project, Operation Restore Trust, HHS and the other Federal, State, and local partners will expand anti-fraud efforts to all 50 states.


The President's plan for Medicaid reforms the program but preserves the guarantee of health and long-term care coverage for the most vulnerable Americans -- more than 37.5 million children, pregnant women, people with disabilities, and the elderly. The President's legislative proposals in Medicaid will achieve a net savings of $9 billion over the five years from 1998 through 2002. This total is comprised of both spending and savings proposals that improve and strengthen the Medicaid program, while more appropriately targeting spending for our most vulnerable populations.

Recognizing that growth in Medicaid spending has declined significantly over the past two years, this budget seeks to maintain these lower spending levels in the out-years when spending growth is projected to rise more rapidly again. The President's Medicaid savings are achieved through the establishment of a per-capita cap and through the reduction and re-targeting of DSH spending, for a total of $22 billion over five years. The budget also makes a number of improvements to the Medicaid program, including changes to last year's welfare reform law, costing $13 billion over the same period.

The major spending initiatives include the children's health initiative and welfare reform related proposals. The plan also helps States meet the most pressing needs, while giving them unprecedented flexibility to administer their programs more efficiently. Finally, the plan retains current nursing home quality standards and continues to protect the spouses of nursing home residents from impoverishment.


One of the best signs of a healthier tomorrow was passage of the Health Insurance Portability and Accountability Act of 1996 which addressed some of the problems workers face in getting, and holding onto, affordable health insurance. We must now take the next step to help the growing numbers of American families who lack health insurance coverage. And that is exactly what this budget proposes to do.

An estimated 10 million children in America today do not have health insurance. The President is proposing these steps to help address this problem and reach the goal of reducing the number of uninsured children by up to 5 million by the end of FY 2000.

  • First, the budget proposes $750 million in annual grants to States to build on their recent successes in working with insurers, providers, employers, schools, and others to develop innovative ways to provide health insurance coverage to children who have neither Medicaid nor employer-sponsored insurance.

  • Second, the budget provides funds to allow States the option to extend one year of continuous Medicaid coverage to children, thus increasing continuity and security for children and families and reducing administrative burdens on States, families, and health care plans which now have to determine eligibility on a monthly basis.

  • Third, the budget includes a $1.7 billion initiative to help about 700,000 children in the families of temporarily unemployed workers maintain health coverage between jobs. This program of grants to states will be available to recipients with incomes below a certain level, who had employer-based coverage in their prior jobs. States will have substantial flexibility to administer the demonstration program.

Finally, we will work with the Nation's Governors to develop new ways to reach out to the 3 million children who are currently eligible for Medicaid but are not presently enrolled. In addition, under current law, an estimated 250,000 14-year-olds will become eligible for Medicaid in 1998.

As a part of the President's health legislation package, our budget includes $25 million in grants to States to establish voluntary health insurance purchasing cooperatives to take advantage of economies of scale to which small firms normally do not have access in purchasing health insurance.


The best gifts we can give our children are strong families, safe communities, and good health. Strong foundations are important for every child's future. Both research and the experiences of parents and caregivers tell us that a child's environment during the early years is especially critical to his or her ability to succeed in school and later in life.

In addition to expanding health care coverage for children, this budget includes many other special initiatives to help our children and families. It is sound fiscal policy to invest in our nation's children; the pay off obviously can be substantial. For this reason, the budget proposes a set of strategic investments.

Head Start: Studies of children enrolled in Head Start and other similar programs continue to show that the Head Start experience has a positive impact on school readiness, increases children's cognitive skills, boosts self-esteem and achievement motivation, and improves school social behavior. Head Start has also been shown to help parents improve their parenting skills, increase participation in their children's school activities and, in many cases, helps parents on the road to self-sufficiency. In short, Head Start works and needs to be expanded to reach more Head Start-eligible children in families not currently served by the program. The budget includes $4.3 billion, $324 million more than in 1997, to ensure that Head Start stays on track to serve 1 million children by 2002. The additional funds will allow Head Start to serve an additional 36,000 new children and their families, bringing total Head Start enrollment to an estimated 836,000.

Adoption Initiative: Each year, State child welfare agencies secure homes for less than one-third of the children for whom the goal is adoption or another permanent placement. These children wait an average of three years to be placed in permanent homes. President Clinton has challenged States and Federal agencies to at least double, by the year 2002, the number of children in foster care who are adopted or permanently placed each year. HHS will lead the effort to identify barriers to permanent placement, set numerical targets, reward successful performance, and raise public awareness. The FY 1998 budget includes $21 million for an adoption initiative. Funds will be used to provide training and enhanced technical assistance to States; support grants to States to assist them in removing barriers to adoption or permanent placement; engage business, church and community leaders in this initiative and develop and lead a public awareness effort to include public service announcements, print material and increase use of Internet to promote adoption. Our budget also proposes paying $108 million between FY 1999 - 200d in incentives to states for increases in adoptions over the previous year which will be offset by corresponding reductions in foster care costs.

Tobacco: Every year, tobacco-related cancer, respiratory illness, heart disease, and other health problems take the lives of 400,000 Americans -- the vast majority of whom began smoking before their 18th birthday. Consequently, in August 1996, the Administration approved the boldest proposal ever made to kick Joe Camel and the Marlboro Man out of our children's lives. The goal of this initiative is to cut tobacco use among our young people by half over 7 years by reducing the ready access that teenagers have to tobacco products and by lessening the pervasive appeal that these products have for potential underage users. Our budget includes $34 million to implement the regulation. The budget also provides $36 million for CDC and $22 million for NIH for financial and technical support to States for tobacco control and cancer prevention activities. In addition, the Substance Abuse and Mental Health Services Administration (SAMHSA) is working with States to help them comply with the 1996 Synar regulation requiring that they reduce the availability of tobacco products to underaged youths.

Reducing Substance Abuse Among Youth: After years of steady decline, marijuana use is rapidly increasing among American youth. As much a cause for concern is the fact that adolescents increasingly feel there is little or no risk to themselves or others in their abusing drugs. To attempt to reverse these trends, the Department is increasing the resources dedicated to preventing marijuana and other substance abuse. The FY 1998 budget specifies $98 million for a SAMHSA youth substance abuse prevention initiative which will allow HHS to mobilize and leverage Federal and State resources, raise awareness and counter pro-use messages, and measure outcomes. Approximately $63 million will be dedicated to State Incentive Grants. These grants will require Governors to develop comprehensive State-wide strategies for reducing youth substance abuse. In designing their plans, States may propose their own approaches but will be offered a menu of effective substance abuse prevention strategies and programs that are based on scientific research. SAMHSA will focus public education efforts on reaching youth and their caregivers by integrating and expanding its Girl Power! and Reality Check anti-drug use campaigns. To measure outcomes, approximately $28 million will be used to expand the National Household Survey on Drug Abuse to capture state-level data. The Household Survey now provides data for making national estimates on the prevalence of substance abuse in the population age 12 years and older as well as information on behavior, attitudes, and household characteristics. The expansion will allow the Department to make state estimates of substance abuse for youth between 12 and 17 and for young adults, benefiting those who are designing state substance abuse prevention and treatment activities. The Administration also calls on Congress to enact SAMHSA's Performance Partnership proposal, which would give States more flexibility to design and coordinate their anti-abuse and mental health programs and target resources to community priorities.

Preventing Teen Pregnancy: Teen pregnancy rates are going down, but more needs to be done. Each year, about 200,000 teenagers who are 17 or younger have children. Their babies are often low birth weight and are at high risk for infant mortality. They are also likely to be poor -- about 80 percent of the children born to unmarried teenagers who dropped out of high school are poor. In contrast, just 8 percent of children born to married high school graduates aged 20 or older are poor. The FY 1998 budget includes $14.2 million for the Adolescent Family Life program, an abstinence-based education initiative which continues to build on the Administration's ongoing efforts to assure that communities are working to prevent out-of-wedlock teen pregnancies. This budget also includes $13.7 million for CDC's program for the prevention of teen pregnancy. In addition, the new welfare reform law signed by President Clinton on August 22, 1996, provides $50 million a year in new funding for the Health Resources and Services Administration (HRSA) to support State abstinence education activities, beginning in FY 1998.


Investments in public health can yield substantial returns -- fewer premature deaths, fewer and less costly illnesses, and healthier, more productive lives. The FY 1998 budget invests in biomedical research and in public health initiatives that show great promise for improving critical health problems while controlling future costs.

Biomedical, Behavioral and Health Services Research: The budget continues the Administration's longstanding commitment to biomedical research, which advances the health and well-being of all Americans. For the National Institutes of Health (NIH), it proposes $13.1 billion for biomedical research that would lay the foundation for future innovations that improve health and prevent disease. The budget includes $223 million to emphasize research in six areas NIH has identified as showing the most promise for addressing public health needs and yielding medical advances, including research on the biology of brain disorders; new approaches to pathogenesis; new preventative strategies against disease; genetics of medicine; advanced instrumentation and computers in medicine and research; and new avenues for therapeutics development. In addition, the request funds research on HIV/AIDS, breast cancer, drug abuse, spinal cord injury and regeneration, as well as many other diseases and disorders that affect the health, productivity, and quality of life of all Americans. The budget request also includes the second year of funding for a new Clinical Research Center, which will give NIH a state-of-the-art research facility in which researchers can continue to bring the latest biomedical research discoveries directly to patients' bedsides.

In just the past year, NIH-sponsored research has produced many major advances, such as locating the first major gene that predisposes men to prostate cancer; pinpointing the location of the gene that researchers believe is responsible for familial Parkinson's disease; and unveiling a map which identifies the locations of over 16,000 genes in human DNA, about one-fifth of the estimated 80,000 genes packaged within the human chromosomes. This will give researchers a ready list of "candidates" for genes involved in human diseases.

Of particular note is an increase of $30 million for NIH's National Institute on Drug Abuse which is part of the Administration's cross-cutting commitment to combat drug abuse. The increased funding will further the development of a medication for the treatment of cocaine addiction.

The budget includes an initiative devoted to improving health care quality. The Agency for Health Care Policy and Research (AHCPR) has requested $5 million on the Quality and Cost Effectiveness Initiative to narrow the gap between what we know and what we do to improve health care. The initiative will focus on developing knowledge and strategies to improve the quality of clinical care. Research on quality and cost effectiveness also plays a crucial role in the continuing effort to decrease expenditures for the Medicare program, while providing quality health care.

Food Safety: In recent years, new and serious food safety problems have occurred with increasing frequency, including illness outbreaks caused by food-borne pathogens such as E. coli, Salmonella, enteritidis, Vibrio vulnificus, and Cyclospora. The Centers for Disease Control and Prevention (CDC) has estimated that each year as many as 33 million cases of food-borne illnesses in the United States result in up to 9,000 deaths. To respond effectively to these food safety issues, the President has proposed a $43 million food safety initiative, including $34 million for CDC and FDA to strengthen surveillance systems for food-borne illnesses nation-wide, and to improve Federal-State coordination when food-borne disease breaks out. The budget would also further support a modernized system of food safety inspection in the seafood industry that quickly identifies potential food safety hazards in the production and processing of such food. In addition, the U.S. Department of Agriculture is a partner in this initiative, with an increase of $9 million requested in FY 1998.

Infectious Disease: Recent outbreaks of various infectious diseases have shown that emerging and re-emerging infectious diseases are an important potential threat to public health. Preventing infectious diseases is far less costly, in human suffering and economic terms, than reacting with expensive treatment and containment measures once public health emergencies occur. To address this need, the budget includes $59 million, $15 million more than in 1997, for CDC's efforts to address and prevent emerging infectious disease. Funds will support training and applied research, and strengthen significantly the States' disease surveillance capability.

The budget also includes $88 million (which is $5 million more than in FY 1997); for NIH's efforts to expand research on new and resurgent infectious diseases as well as the development of vaccines. Funds will support basic and applied research on infectious diseases to facilitate the detection and control of infectious agents.

HIV Treatment and Prevention: In 1996, the Ryan White CARE Act was reauthorized with strong bipartisan support. The budget proposes over $1 billion for HRSA's Ryan White activities, $40 million more than in 1997. This will help our hardest hit cities, States, and local clinics provide medical and support services to individuals with HIV/AIDS. Under this Administration, funding for Ryan White grants has risen by 158 percent. The 1998 budget would fund grants to cities and States to help finance medical and support services for individuals infected with HIV; to community-based clinics to provide HIV early intervention services; to pediatric AIDS and HIV dental activities; and to HIV education and training programs for health care providers. The FY 1998 Ryan White request includes $167 million specifically for the AIDS drug assistance programs. In an effort to give states the flexibility to provide a combination of primary AIDS care services -- AIDS drugs, insurance continuation and other medical and support services -- to best meet their own needs, the budget provides a $15 million increase to the overall Title II state grant program. Finally, the budget proposes $634 million for the CDC's HIV prevention activities, $20 million more than in 1997 to help prevent HIV among injecting drug users, who are at great risk of HIV infection.


In keeping with the President's commitment to the American people to reinvent and reduce the size of Government, the Department has continued to streamline organizational structures and focus our efforts on reducing employment while preserving the resources necessary to carry out our missions. The Department as a whole ended FY 1996 at a comparable level of 57,629 FTE which is more than 1,600 FTE under the budget target for the year. Since 1993, the Department has reduced staffing levels by approximately 7,600 FTE, or 12 percent. As we struggle to meet balance budget targets, we will be looking for innovative ways of financing our streamlining plans for this and future years.

The FY 1998 budget request supports the continuation of our efforts to transform the Department into a high-performance, customer-focused organization. Our past efforts have led to better service to our customers, reduced bureaucracy and red tape, increased flexibility in the administration of our programs, and internal changes that help the Department work better and save taxpayer dollars. For example, as a result of a recent study of our data collection centers, we are consolidating our data operations resulting in an expected savings of $57.3 million.

We view the Government Performance and Results Act as an invitation to demonstrate the effectiveness of the programs we administer by measuring results. As we implement this Act, we will strive to measure program outcomes that reflect our goals.

HHS and its partners have a significant body of experience to build on in measuring program results, most notably our Healthy People 2000 initiative, which has focused widespread Federal and non-federal resources and attention on specific health outcomes for Americans. In the past year, internal pilot performance plans were developed by each of our operating divisions. Our FY 1999 budget will include detailed performance goals and measures that focus on the results our programs achieve.


The FY 1998 budget for the Department of Health and Human Services accomplishes four major goals.

  • First, it makes a major contribution to the goal of a balanced budget through targeted reforms of our entitlement programs and by limiting discretionary program growth. It also contributes to this goal through continued effort to curb fraud, waste, and abuse in Medicare and Medicaid.

  • Second, it preserves, protects, and expands our health insurance system. Medicare is protected and trust fund solvency is extended. Medicaid will be reformed and expanded to cover up to 3 million more children. Two new programs will also extend health insurance to unemployed workers, their families and uninsured children.

  • Third, it provides much needed investments in programs -- Head Start, teen pregnancy prevention, adoption programs, and tobacco and drug use control among our children -- that help families raise their children.

  • Fourth, it proposes a public health system for the 21st century that will improve the nation's health by expanding medical research to ensure the safety of our food supply and strengthening our ability to respond to new and emerging infectious diseases and AIDS.

Thank you, Mr. Chairman, for the opportunity to present our budget to this Subcommittee. We look forward to working with this Subcommittee on our FY 1998 budget requests. I will be happy to answer any questions you or Members of the Subcommittee may have.


Health Resources and Services Administration (HRSA) - The FY 1998 budget request for HRSA is $3.3 billion. Over $1 billion is proposed for Ryan White activities, a $40 million, or 4 percent increase over FY 1997. This will continue our commitment to improve the quality and availability of care for individuals and families with HIV and AIDS. The request for the Consolidated Health Centers cluster provides $810 million for grants to local health centers that serve vulnerable under-served populations, including migrant workers, homeless individuals, and residents of public housing. This funding level maintains our commitment to ensure that they receive quality health care. The HRSA budget supports funding of several programs with the sole mission of improving the health of women of childbearing age and their children. These programs include the Maternal and Child Health Block Grant ($681 million); and the Title X Family Planning program ($203 million). In addition, HRSA will fund a new $50 million mandatory abstinence education block grant to States which was authorized in the Welfare Reform Bill.

Centers for Disease Control and Prevention (CDC) - The FY 1998 request for CDC totals $2.45 billion in program level, a net increase of $36 million over FY 1997. Within this level, $25 million will be targeted to improve infectious disease prevention and control; and $10 million will be used to help ensure, in partnership with other government agencies, the safety of the food supply. Also included in the request are increased resources of $20 million to target HIV prevention efforts toward injecting drug users, a growing segment of all new AIDS cases. The FY 1998 budget also continues and enhances CDC's diabetes control program, with a requested increase of $10 million. With this initiative, CDC will fund diabetes control programs in all 50 States. CDC is requesting an increase of $15 million to conduct multi-faceted tobacco control programs in 32 States and the District of Columbia to reduce the use of tobacco, especially among our nation's youth. An added $5 million is requested to begin to replicate model programs to conduct intensive chlamydia screenings across the country. Reducing chlamydia infections ultimately results in a much lower rate of reproductive health consequences including infertility of women. Finally, the elimination of most vaccine-preventable diseases remains a major priority of the CDC. With the funds requested, CDC will be able to support the same level of State purchases of vaccine, as well as improvements to the delivery system, as was done in FY 1997.

National Institutes of Health (NIH) - The FY 1998 request for NIH totals $13.1 billion, an increase of $337 million, or 2.6 percent, over FY 1997. Within this increase, $271 million is devoted to providing a 3.9 percent rate of growth in funding for investigator-initiated research project grants (RPGs), NIH's highest priority. These grants support new and promising ideas cutting across all areas of medical research. In FY 1998, the NIH budget provides nearly $7.2 billion to support a record total of 26,679 RPGs, including 7,112 new and competing RPGs. Overlapping with the RPG increase is the NIH request for an additional $223 million to emphasize research in six areas NIH has identified as showing the most promise for addressing public health needs and yielding medical advances, including research on the biology of brain disorders; new approaches to pathogenesis; new preventive strategies against disease; genetics of medicine; advanced instrumentation and computers in medicine and research; and new avenues for therapeutics development. Also included within the request is an additional $30 million specifically to expand research on drug abuse and drug treatment and prevention. The development of a medication for the treatment of cocaine addiction is the highest priority for FY 1998 of the National Institute on Drug Abuse. The FY 1998 budget continues to request all of NIH's AIDS-related funds -- $1.5 billion -- in a single account for the Office of AIDS Research (OAR), consistent with the provisions of the NIH Revitalization Act of 1993. The Director of OAR will transfer AIDS funds to the Institutes in accordance with the comprehensive plan for AIDS research developed by the OAR along with the Institutes. The Administration strongly supports a consolidated AIDS appropriation within NIH as a vital part of ensuring a coordinated and flexible response to the AIDS epidemic. In addition, $90 million in total is requested, the same as in FY 1997, for the second phase of construction funding for NIH's new Clinical Research Center.

Substance Abuse and Mental Health Services Administration (SAMHSA) - The FY 1998 President's budget for SAMHSA totals $2.2 billion, an increase of $34.4 million or 1.5 percent over the FY 1997 enacted level. This funding level will continue our commitment to improving the quality and availability of mental health and substance abuse services. The request dedicates additional resources to substance abuse, including a $10 million increase for the Substance Abuse Performance Partnership Block Grant and $28 million for data collection activities to expand the National Household Survey on Drug Abuse (NHDSA) to individual States. A major component of SAMHSA's budget will focus on combating recent increases in teenage drug use. The 1998 budget request continues to expand funding for the Youth Substance Abuse Prevention Initiative by mobilizing and leveraging Federal and State resources to call upon Governor's to develop State-wide prevention plans; raising public awareness and countering pro-drug use messages aimed at adolescents and families; and tracking youth drug use at a State-by-State level to measure progress of youth drug attitudes and use. This proposal directly addresses Goal #1 of the National Drug Control Strategy to "motivate America's youth to reject illegal drugs as well as the use of alcohol and tobacco."

Agency for Health Care Policy and Research (AHCPR) - The FY 1998 request for AHCPR totals $149 million in program level, an increase of $5.5 million over the FY 1997 level. The FY 1998 request will fully fund previous research commitments, support the Medical Expenditure Panel Surveys (MEPS), and fund the Quality and Cost Effectiveness of Clinical Care initiative. This initiative will focus on developing knowledge, tools and strategies to improve the quality of clinical care. This research also plays a critical role in the continuing effort to reduce health care expenditures, while still providing high quality services. The $36.3 million requested for MEPS will continue this major data survey, providing the public with timely national estimates of health care use and expenditures, private and public health insurance coverage, and the availability, costs and scope of private health insurance benefits among the U.S. population.

Health Care Financing Administration (HCFA) - HCFA is the largest purchaser of health care in the world. In FY 1998, Medicare and Medicaid expenditures will be about $311 billion for 71 million beneficiaries. The FY 1998 request for program management, the budget responsible for administering these two programs is $1.8 billion or a little over one half of 1 percent of total Medicare and Medicaid outlays. Of this amount, almost 70 percent will go to 75 private sector insurance companies throughout the United States who process and pay the claims for the care given to Medicare beneficiaries. Only about 20 percent ($359 million) of the requested amount will go to fund federal employees and their activities (about one tenth of 1 percent of total Medicare and Medicaid outlays). These activities maintain and strengthen the Department's commitment to develop more efficient operating systems; manage programs to fight fraud, waste, and abuse; and promote and monitor managed care spending and quality of care. To deal with the growth in new health care facilities joining the Medicare program, the Department proposes a user fee for new facilities to be collected by the States to cover the cost of initial surveys.

Administration for Children and Families (ACF) - ACF is the Department's lead agency for programs serving America's children, youth and families. It also has the lead in implementing the recently enacted Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193), including the Temporary Assistance to Needy Families (which replaces the Aid to Families with Dependent Children program), the child care entitlement program, and new research and evaluation activities.

The FY 1998 budget for ACF totals $34.6 billion, including $19 billion appropriated under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Our request includes $8 billion for discretionary programs that promote safe and healthy children and youth and support our Nation's working families including: $4.3 billion for Head Start to provide an additional 36,000 children with Head Start experience and establish strong foundations for a total of nearly 836,000 children and their families; $1 billion for the Child Care and Development Block Grant; and $410 million for a range of discretionary programs that help States and local communities protect children, including a new Adoption Initiative to bring more foster care children into healthy, stable homes.

The FY 1998 budget also includes almost $27 billion for entitlement programs. Of this amount, approximately $17 billion is for the Temporary Assistance for Needy Families (TANF) program, which transforms welfare into a system that requires work in exchange for time-limited benefits. A total of $2.2 billion (this includes $107.5 million in estimated carryover from FY 1997) is requested for child care programs to allow States maximum flexibility in developing child care programs. This amount combined with $1 billion in discretionary spending requested for the Child Care and Development Block Grants, will further the Administration's commitment to supporting families and moving families from welfare to work. In FY 1998, we estimate that Federal and State governments will spend about $3.5 billion in order to collect over $13.7 billion in child support payments -- an 8 percent increase over 1997. The budget also includes $4.3 billion for Foster Care, Adoption Assistance and Independent Living programs. The President's Adoption Initiative proposes to pay incentives to States for increases in adoptions of children from State foster care systems. This new entitlement to States will result in no net increase in outlays because increases in Adoption Assistance will be offset by savings in Foster Care.

Administration on Aging (AoA) - The FY 1998 budget for AoA provides $838.2 million for programs aimed at maintaining or improving older Americans' quality of life. For FY 1998, AoA requests $291.4 million for Supportive Services and Centers, to provide funding for the nationwide network of 57 State units on aging, 661 Area Agencies on Aging, 6,400 senior centers, and more than 27,000 service providers. Also requested is $469.9 million for Nutrition Services, to continue providing the 242 million congregate and home-delivered meals served to vulnerable senior citizens. In addition, AoA requests $9.3 million for in-home services for the frail elderly, $16.1 million for grants to Native Americans, $15.6 million for preventive health services, and $4.0 million for aging training, research and related programs. Finally, to improve service and streamline administration, the request includes three program changes: a consolidation of the various programs authorized under Title VII of the Older Americans Act into a single Grants to States for Protection of Vulnerable Older Americans program, with total funding of $9.2 million; a transfer of the Alzheimer's Disease Demonstration Grants to States program ($8.0 million) from the Health Resources and Services Administration (HRSA) to AoA; and the transfer of DOL's Community Service Employment for Older Americans program ($440.2 million) to AoA.

General Departmental Management (GDM) - The FY 1998 budget request provides a program level of $192 million for General Departmental Management (GDM), including an appropriation of $172 million and intra-agency transfers of $20 million in one-percent evaluation funds. GDM supports those activities associated with the Secretary's roles as chief policy officer and general manager of the Department through nine Staff Divisions (STAFFDIVs): the Immediate Office of the Secretary, the Offices of Public Affairs, Legislation, Planning and Evaluation, Management and Budget, Intergovernmental Affairs, General Counsel, and Public Health and Science, and the Departmental Appeals Board. In FY 1998, the GDM request includes funds for Policy Research -- formerly a separate appropriation account -- to support research on issues of national importance.

Office for Civil Rights (OCR) - The OCR requests $21 million, an increase of $1 million above FY 1997. OCR has made significant progress in addressing issues such as race discrimination in access to health care and discrimination against persons with disabilities. The FY 1998 budget request supports outreach and other compliance initiatives that seek new ways of preventing civil rights problems and addressing potential discrimination in HHS programs. This includes implementation of new nondiscrimination requirements covering adoption and foster care placements that will support the President's Adoption 2002 initiative.

Office of Inspector General ( OIG) - The OIG requests a discretionary budget of $32 million, a decrease of $3 million below the comparable FY 1997 level. OIG will focus its resources in the following areas: evaluating various options and methods to increase collections in the Child Support Enforcement Program; assessing the adequacy of the Food and Drug Administration's control over investigational new drugs; investigating grant and contract fraud, research fraud, and allegations of wrongdoing in the Department's public health programs; and auditing management control systems and financial operations.

In addition, the Health Insurance Portability and Accountability Act of 1996 appropriates funds to OIG for the Health Care Fraud and Abuse Control Program. OIG will receive between $80 million and $90 million in FY 1998, to be determined by agreement between the Secretary of HHS and the Attorney General. Under this program, OIG will: build upon and expand the proven effective policies and practices of Operation Restore Trust; enhance general Medicare fraud and abuse enforcement activities; and develop innovative anti-fraud initiatives.

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